Business

4:35 am

Wed August 15, 2012

British Bank Settles Money Laundering Charges

A British bank has agreed to settle charges that it illegally laundered Iranian money. The settlement with Standard Chartered was announced by New York banking regulators, who'd brought the charges just a week ago. The bank still is under investigation by the federal government. NPR's Jim Zarroli has more.

JIM ZARROLI, BYLINE: New York's Department of Financial Services had accused Standard Chartered of acting like a rogue bank. They said it illegally processed many thousands of transactions for Iranian companies and banks over a 10 year period, despite U.S. economic sanctions. The bank strongly denied the charges at first, then yesterday it backed down, agreeing to let a monitor oversee its international transactions and to pay a fine.

Karen Shaw Petrou of Federal Financial Analytics says the fine is about in line with those levied against other banks accused of money laundering.

KAREN SHAW PETROU: Three hundred forty million dollars is not the biggest settlement of this sort reached, but it's a lot of money and significantly validates the New York claim, even if it doesn't prove it.

ZARROLI: Petrou notes that the settlement was announced one day before a hearing where Standard Chartered was supposed to explain why it shouldn't lose its New York banking license. That would have been a devastating blow for the bank, she says. New York is arguably still the financial capital of the world and a global bank has to have a presence in the city.

PETROU: I think it said that Standard Chartered recognized that the franchise value of having their New York State license in jeopardy, if not at real risk, was so grave that they needed to settle before the hearing.

ZARROLI: Standard Chartered is only the latest global bank to be accused by U.S. regulators of money laundering. The Dutch bank ING has acknowledged that it moved Cuban and Iranian money through the U.S. A Senate committee has accused HSBC of doing business with Mexican drug cartels.

Still, the filing of charges against Standard Chartered had generated some sniping by British officials. They suggested that the charges were overblown and that regulators were going after overseas banks as a way of preserving New York's place as a financial capital.

U.S. regulators, who had launched their own investigation of the bank, were also said to be unhappy with New York's move. But former Treasury Department official Jimmy Gurule says U.S. regulators haven't been aggressive enough about pursuing money laundering. And he says the fine levied against Standard Chartered isn't enough.

JIMMY GURULE: Once again we have a case where bank officials, foreign bank officials, have admitted to violating Iranian economic sanctions in violation of federal law, but yet no bank official has been criminally charged for wrongdoing.

ZARROLI: Gurule, who teaches at Notre Dame University, says the bank handles millions of financial transactions a day, and placing a state monitor inside the bank won't accomplish much.

GURULE: I mean that seems like window dressing and a Band-Aid for me.

ZARROLI: But the case against Standard Chartered isn't over. The FBI, the Justice Department and the Federal Reserve are all conducting investigations of their own. None of those agencies was part of the settlement announced yesterday and they could file further charges against the bank.